CoreLogic’s Home Value Index shows Australia’s housing downturn increased its momentum in June, driven by sharper falls in Sydney and Melbourne as well as weakening conditions elsewhere.
It was the second consecutive month of value declines, down -0.6%, to take overall values -0.2% lower over the June quarter. Continued falls in Sydney dwelling values (-1.6% month and -2.8% quarter) and Melbourne (-1.1% month and -1.8% quarter) were the primary drivers of this month’s steeper drop, but housing values were also down in Hobart (-0.2% month and -0.1% quarter) as well as regional Victoria (-0.1% month and +1.2% quarter).
Every capital city and broad rest of state region is now well past its peak rate of growth as trend rates eased across the remaining markets.
Adelaide the only capital to record greater than 1% monthly growth
Australia’s third largest city, Brisbane, saw growth in housing values flatten out to just 0.1% in June, while Adelaide remains the only capital still recording a monthly growth rate higher than 1.0% (1.3%).
Growth in Perth’s housing values, which were temporarily showing a second wind as state borders reopened, are again losing steam with values up 0.4% in June.
CoreLogic Research Director, Tim Lawless, noted the housing market’s sharper reduction in growth coincides with the May cash rate hike, surging inflation and low consumer sentiment.
“Housing value growth has been easing since moving through a peak in March last year, when early drivers of the slowdown included rising fixed term mortgage rates, an expiry of fiscal support, a trend towards lower consumer sentiment, affordability challenges and tighter credit conditions,” he said.
“More recently, surging inflation and a rapidly rising cash rate have added further momentum to the downwards trend. Since the initial cash rate hike on May 5, most housing markets around the country have seen a sharper reduction in the rate of growth.
“Considering inflation is likely to remain stubbornly high for some time, and interest rates are expected to rise substantially in response, it’s likely the rate of decline in housing values will continue to gather steam and become more widespread.”
Regional prices still increasing but more slowly
The combined regionals index remained in positive growth territory in June, albeit slightly, rising 0.1%, reducing quarterly growth from a peak of 6.6% in April last year, to 2.0% over the three months to June. In contrast, the combined capital cities index was down -0.8% over the June quarter, reducing from a peak of 7.1% over the three months to May last year.
Apartments holding value better than houses
Unit markets are holding their value a little better than houses across the largest capitals. Sydney recorded a -3.0% drop in houses values through the June quarter compared with a -2.1% fall in unit values. Melbourne also showed a smaller quarterly decline in units relative to houses at -0.5% and -2.4% respectively.